The pound rebounds after Johnson defeated in Brexit vote

The pound has rebounded after traders cheered the defeat of Boris Johnson in Parliament on Tuesday night as rebel MPs seek to block a no-deal Brexit.

Sterling jumped higher against the dollar and euro on Wednesday morning after Conservative rebels backed opposition parties to allow them to take control of business in the House in a bid to stop the UK crashing out of the EU without a deal.

23PHOTOS

Brexit: Day of drama at Westminster

See Gallery

Brexit: Day of drama at Westminster

Leader of the House of Commons Jacob Rees-Mogg reclining on his seat in the House of Commons London.

Leader of the House of Commons Jacob Rees-Mogg reclining on his seat in the House of Commons London.

Prime Minister Boris Johnson leaves the House of Commons, London after MPs voted in favour of allowing a cross-party alliance to take control of the Commons agenda on Wednesday in a bid to block a no-deal Brexit on October 31.

LONDON, ENGLAND - SEPTEMBER 03: Secretary of State for Work and Pensions Amber Rudd leaves the Houses of Parliament on September 3, 2019 in London, England. The Rebel Alliance, including a number of Conservative MPs, have won a vote 328 to 301 for a motion that allows them to take charge of the Parliament order paper tomorrow allowing them to debate on a bill to block a no deal Brexit. (Photo by Peter Summers/Getty Images)

An anti-Brexit protester shouts slogans while demonstrating in central London on the day MPs return back to Parliament after the summer recess.
On Monday 2 Sept 2019 British Prime Minister Boris Johnson warned Conservative MPs not to vote against the government in the next night's Bill that would block a no deal Brexit. Several MPs vowed to vote with the opposition regardless of the personal consequences. (Photo by Steve Taylor / SOPA Images/Sipa USA)

Kenneth Clarke and former prime minister Theresa May look on as Prime Minister Boris Johnson makes a statement to MPs in the House of Commons, London, on the G7 Summit in Biarritz.

A man is seen dressed as British Prime Minister Boris Johnson pushing the plunger on a ''No-Deal Bomb'' while demonstrating in central London on the day MPs return back to Parliament after the summer recess.
On Monday 2 Sept 2019 British Prime Minister Boris Johnson warned Conservative MPs not to vote against the government in the next night's Bill that would block a no deal Brexit. Several MPs vowed to vote with the opposition regardless of the personal consequences. (Photo by Steve Taylor / SOPA Images/Sipa USA)

Anti-Brexit protesters with placards and flags demonstrating in central London on the day MPs return back to Parliament after the summer recess.
On Monday 2 Sept 2019 British Prime Minister Boris Johnson warned Conservative MPs not to vote against the government in the next night's Bill that would block a no deal Brexit. Several MPs vowed to vote with the opposition regardless of the personal consequences. (Photo by Steve Taylor / SOPA Images/Sipa USA)

Anti-Brexit protesters with flags playing music while demonstrating in central London on the day MPs return back to Parliament after the summer recess.
On Monday 2 Sept 2019 British Prime Minister Boris Johnson warned Conservative MPs not to vote against the government in the next night's Bill that would block a no deal Brexit. Several MPs vowed to vote with the opposition regardless of the personal consequences. (Photo by Steve Taylor / SOPA Images/Sipa USA)

A piece of satirical artwork by Artist Kaya Mar showing the Queen, Speaker John Bercow and Prime Minister Boris Johnson outside Parliament.
On Monday 2 Sept 2019 British Prime Minister Boris Johnson warned Conservative MPs not to vote against the government in the next night's Bill that would block a no deal Brexit. Several MPs vowed to vote with the opposition regardless of the personal consequences. (Photo by Steve Taylor / SOPA Images/Sipa USA)

A Pro-Brexit protester with a placard demonstrating in central London on the day MPs return back to Parliament after the summer recess.
On Monday 2 Sept 2019 British Prime Minister Boris Johnson warned Conservative MPs not to vote against the government in the next night's Bill that would block a no deal Brexit. Several MPs vowed to vote with the opposition regardless of the personal consequences. (Photo by Steve Taylor / SOPA Images/Sipa USA)

A Pro-Brexit protester with a placard demonstrating in central London on the day MPs return back to Parliament after the summer recess.
On Monday 2 Sept 2019 British Prime Minister Boris Johnson warned Conservative MPs not to vote against the government in the next night's Bill that would block a no deal Brexit. Several MPs vowed to vote with the opposition regardless of the personal consequences. (Photo by Steve Taylor / SOPA Images/Sipa USA)

Pro-Brexit protesters with placards and banners, demonstrating in central London on the day MPs return back to Parliament after the summer recess.
On Monday 2 Sept 2019 British Prime Minister Boris Johnson warned Conservative MPs not to vote against the government in the next night's Bill that would block a no deal Brexit. Several MPs vowed to vote with the opposition regardless of the personal consequences. (Photo by Steve Taylor / SOPA Images/Sipa USA)

Brexit protesters in Westminster, London, as MPs are taking part in an emergency debate over a new law to block a no-deal Brexit.

Brexit protesters on Westminster Bridge in London, as MPs are taking part in an emergency debate over a new law to block a no-deal Brexit.

Brexit protesters marching from the Palace of Westminster in London as MPs are taking part in an emergency debate over a new law to block a no-deal Brexit.

A woman watches demonstrators as she is trapped on a bus blocked by anti-Brexit protesters outside the Houses of Parliament in London, Britain September 3, 2019. REUTERS/Kevin Coombs

LONDON, UNITED KINGDOM - SEPTEMBER 03 : A female anti-Brexit protester climbs the statue of Sir Winston Churchill during a protest against British prime minister Boris Johnson's policies on Brexit and the prorogation of parliament at Parliament Square in London, United Kingdom on September 03, 2019. British prime minister Boris Johnson on Monday has warned rebel Tory MPs from voting in favour of legislation that would prevent a no-deal Brexit and request an extension from the EU as tensions rise between parliament and the government. (Photo by Ray Tang/Anadolu Agency via Getty Images)

Brexit protesters in Westminster, London, as MPs are taking part in an emergency debate over a new law to block a no-deal Brexit.. (Photo by Victoria Jones/PA Images via Getty Images)

TOPSHOT - A demonstrator carries a placard during a protest outside the Houses of Parliament in central London on September 3, 2019, hosted by The People's Assembly Against Austerity. - The fate of Brexit hung in the balance on Tuesday as parliament prepared for an explosive showdown with Prime Minister Boris Johnson's that could end in a snap election. Members of Johnson's own Conservative party, including Philip Hammond, are preparing to join opposition lawmakers in a vote to try to force a delay to Britain's exit from the European Union if he cannot secure a divorce deal with Brussels in the next few weeks. (Photo by Oli SCARFF / AFP) (Photo credit should read OLI SCARFF/AFP/Getty Images)

Up Next

See Gallery

Discover More Like This

HIDE CAPTION

SHOW CAPTION

of

SEE ALL

BACK TO SLIDE

The value of the pound rose 0.48% to 1.214 against the dollar while it jumped 0.35% to 1.105 against the euro.

It came after the pound slid to a three-year low of less than 1.20 on Tuesday as investors braced themselves for a turbulent day in Westminster.

On Wednesday, MPs will debate draft legislation put forward by a cross-party group which would require a delay to Brexit unless there was a deal or Parliament explicitly backed leaving the EU without one by October 19.

A vote on a general election could be held later in the day.

Market analysts have warned that although ruling out a no-deal Brexit would steady the pound, a snap election could also cause significant volatility in the currency.

"The move higher only serves to underscore the kind of headline risk and volatility we can expect to see over the coming weeks which will make sterling a tough currency to trade."

Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: "Johnson's defeat gave a breather to the pound markets, although the game is not over yet for the GBP bears.

"Boris Johnson could announce a snap election by October 14 to seek support from British voters to get the Brexit done, with or without a deal.

"An election as early as next month could give another shake to the sterling, but even a tiny hope of preventing Johnson from crashing out of the EU without a deal could help the currency consolidating support near the 1.20 level against the US dollar and eventually recovering a part of the recent weakness."

Sterling also benefited from rises in the Asian markets overnight, with the Hong Kong-based Hang Seng equity market rising 1.2% on the back of strong technology stocks.